Christopher Fontana, JHC’s Contracting Professional of the Year, builds trust with his health system’s clinicians in the journey toward cost reduction and product improvement
By Laura Thill
Christopher Fontana
Theoretically, a cost, quality and outcomes approach should lead to sound fiscal results for an IDN. But, as Christopher Fontana, director of strategic sourcing at Jefferson Health and the JHC Contracting Professional of the Year, discovered, without the full engagement of all players in the hospital system – including the clinicians – the outcome will be much less effective than originally intended.
“While a cost, quality and outcomes (CQO) approach has existed at Jefferson Health for some time, supply chain and administration seemed to be working independently, with clinicians having no incentive to participate,” says Fontana. At times, it appeared the clinicians were “reluctantly along for the ride,” he adds. “Much good work was being done on a project-by-project basis, but there was no cultural buy-in to the idea of cost management.”
The advancement of healthcare
When Fontana joined Thomas Jefferson University and Hospitals in 2013 (which has since merged with Abington Health in May 2015 to form Jefferson Health), he brought with him a strong background in global electronic sourcing and procurement. “Before Jefferson Health, I was with GlaxoSmithKline,” he says. “Their procurement function was perennially ranked among the world’s best and I was fortunate to work with and for some very talented people. I learned a lot about leadership and what good procurement is made of. Until my last year there, I ran the global commercial and research and development eSourcing team within procurement. My group focused on increasing the delivery and efficiency of the sourcing process across indirect categories through developing and executing innovative sourcing strategies and leveraging technology. This drove tens of millions of dollars in annualized savings and accelerated the delivery window. In my final year at Glaxo, I helped lead the transformation of the global procurement function, redesigning it from the ground up to better align the function with changes in the marketplace and the business and geographic needs of the organization. I was attracted to the opportunity at Jefferson Health because it permitted me to continue this transformation work in a new industry, at a place where the outcome of my work would be very closely connected to something as meaningful as the quality and advancement of healthcare and research.”
Today, Fontana has oversight of sourcing, contracting, purchasing and supplier relationship management at Jefferson Health. His responsibilities include building relationships with departments, clinicians and other stakeholders to align with their processes and needs; analyzing Jefferson’s portfolio of products and services; identifying opportunities to reduce costs and/or improve technology; developing and executing sourcing strategies; and contracting with select vendors (including developing these relationships and managing vendor performance to ensure continuous improvement and a focus on innovation). Fontana’s team also maintains all item catalogues from which supplies are ordered.
Driving change
In 2015, Fontana made it a point to partner with clinicians, focusing on “the realities and risks of managing supplies the old way, leading to variation and preference that add undue cost and threaten the financial health of hospitals and, by extension, the livelihood of the clinicians themselves,” he explains. “It’s a collaborative effort that couldn’t be done without the support of senior administration, including our president, department heads, my vice president of supply chain and many others who play an integral role in trying to sell this message. What we tried to do – very successfully in some areas and with much work to be done in others – is align our clinicians with our sourcing processes, making them partners in our efforts to help choose the best products. CQO is still at the core of everything we do, but we’ve also had to look at upstream impacts of our product decisions, asking how these products affect revenue, patient reach and satisfaction, our volume of cases, and more.”
In the last year and a half, Fontana and his team have looked at their spend profile “from top to bottom,” and prioritized their efforts based on complexity and value to ensure that their sourcing efforts align with the new reality of the healthcare marketplace. Categories are continuously reviewed, with several questions asked, he explains:
- “Is there something better we could be doing?”
- “Are there better products that could have been introduced?”
- “Are we keeping pace with technology and our competition?”
- “Has market pricing shifted?”
- “Could we consolidate our supply base?”
- “Are there changes in practice that could help reduce variation and cost?”
“There are many dots between a sourcing process and the patient, and they are often hard to connect; but we’ve seen real impact to patient care that comes from better supply management,” says Fontana. “Let’s say we can concentrate volume with fewer vendors in a given orthopedic category. This translates not only to better pricing, but to fewer deliveries, reduced variation in instrumentation, improved logistics and lower complexity – all of which should lead to better, faster and more consistent sterilization of supplies that enable more on-time starts for surgeries, less bio-burden and reduced infections, etc. These are very visible, very important effects, which improve patient care and satisfaction of patients and clinical staff.”
The success of Jefferson Health’s physician engagement model is reflected in its orthopedic program. “Jefferson has one of the largest and most successful orthopedic programs in the country,” Fontana says. Yet, despite several successful savings efforts in the past, changes in the marketplace left the IDN with supply costs that were “higher than what a program of our size merits,” he points out. “Orthopedic categories are typically physician preference, meaning surgeons [may select] the products of their choice as long as the suppliers subscribe to our price points. Given the size and success of the program here, driving change and convincing the surgeons to support a rigorous sourcing process – and potentially limit their choice – was going to prove difficult.
“We met with the departments and surgeon champions, developed a common understanding of products that are core to their success (versus those where there is parity, or where premium pricing is deemed out of line with the benefits of a given product), gained their support for a shelf price approach (meaning physicians could use products from any vendor that can meet our prescribed price points) and proceeded to engage the supplier community,” Fontana continues. “We set aggressive targets based on our assessment of continued pricing trends in the marketplace, and in line with the prestige of Jefferson’s programs.”
In an effort that concluded last May, Jefferson Health agreed on terms with its largest supplier. However, two other high-volume suppliers refused to meet its targets. “This presented a real test to the solidarity of our sourcing/physician partnership,” he notes. “Working together, we agreed to stand firm and ultimately suspended the two vendors. This in itself is nothing to gloat about, but it was a triumph of this new physician engagement model that sent a message – internally and externally – that this is a new era, that strategies developed in concert with supply chain and physicians would not be compromised, and that variation would no longer be tolerated.”
With regard to another effort completed in September, in spite of weeks-long negotiations with vendors, Jefferson Health fell short of its savings target. “We were confident we had done everything right up to this point, including a market assessment, a comprehensive stakeholder engagement and communication plan, and a sound sourcing strategy with very clear messaging to our suppliers,” Fontana says. “This was going to require either an adjustment to our goal or a revision to our approach, which could deliver the same financial benefit.
“With hospitals around the country continuing to press vendors and squeeze margins, growth offered the only opportunity for us to meet our targets,” he continues. “But the growth of one vendor means the decline of another, and this meant limiting choice for our surgeons – a fundamental change from our initial shelf price, all-play approach. Through much preparation, analysis and discussion, we gained the support of the physician community to opt for a growth plan with one of our key vendors. This growth represented a large financial opportunity, as well as a chance to implement strong service and performance standards into our agreement, meaning many of the service-related issues that surgeons don’t typically associate with the contracting of goods could be addressed and actually improved. Through this process, we have strengthened our relationship with the surgeons and will dramatically reduce costs. And, we have entered into a true partnership with a vendor that will deliver superior service and quality.”
Since then, Fontana’s team has continued to assess all categories for alignment with the IDN’s new healthcare model, building “trust and relationships with our clinicians so that they are participants in the journey for cost reduction and product improvement, rather than passengers,” he explains. “We could have a few category-specific successes, but for the long-term sustainability of our efforts, we need clinicians to believe in – and become advocates of – our processes.”
True partners
Jefferson Health’s success not only depends on a joint effort between the IDN’s supply chain and clinicians. As health systems across the country know very well, supply chain’s partnership with its suppliers is key. “The word ‘partner’ gets thrown around very loosely these days,” says Fontana. “There are some suppliers with whom we have transactional relationships, and that’s okay, as long as we’re both honest about the nature of the relationship.
“The opportunity for strategic partnerships exists when our interests are aligned, both financially and clinically,” he continues. “Our suppliers understand that we need to manage costs, but that we don’t want to compromise quality or innovation, and they work with us to identify scenarios that help us both grow. Partners can trust each other, and that trust works both ways. If there are issues with products or services, we work with these suppliers to resolve them and invest extra effort into fostering the relationship. In return, we expect that our suppliers involve us in their selling activities to ensure that we’re aligned with our clinical staff, and are working together to review new products and opportunities, rather than being in a reactive or combative dialogue with clinicians because a supplier has attempted to triangulate the organization in order to build momentum on their own.
“A good supplier partner is also open to constructive input and understands the importance of reviewing the service it provides, which supports the products we are buying from them,” Fontana says. “Ultimately, partners should be innovative, transparent and collaborative so that we can grow together, reach more patients and improve and advance the quality of the care we are giving them.”
Far-reaching effects
The future of healthcare contracting is positive, says Fontana, assuming supply chain executives adopt a healthy perspective moving forward. “Supply chain can no longer just be about price containment, contracting and purchase order efficiency,” he says. “Cost is just one variable, and supply chain and contracting groups must recognize that the products we help choose have far-reaching effects that can impact revenue, patient satisfaction and the long-term health of our hospitals. We must be purveyors of the best products, services and technology that help our health systems grow through margin enhancement, patient reach and the advancement of care. We must be seen by clinicians as partners in this endeavor – not bureaucrats through whom their practice and ability to serve our community rests.
“There may be no function in a hospital more effectively positioned at the cross-section of suppliers, clinicians and administration to influence the supplies and services that directly support and, in many cases, impact growth and quality of care,” says Fontana. “Hospitals that are forward thinking will recognize this and ask their contracting departments to do more than ever before. I believe we’ll see some sourcing and supply chain groups elevated to roles that involve strategic planning. Running good sourcing projects won’t be enough, and contracting departments will need to be more strategic by aligning themselves with departments and embedding themselves in their planning processes, in order to maximize the opportunities to advance care and reduce costs.
“Cutting purchase orders in a timely fashion, having clean contracts and doing a good job at cost containment through effective one-off projects will still be necessary, but this will need to be part of a much more comprehensive approach to procurement,” he continues. This approach will depend on highly skilled people who can develop processes and utilize technology to build and leverage relationships throughout the organization, as well as develop sourcing plans that prioritize efforts and generate high returns, he notes. They will also need to work with key suppliers to ensure that service and quality continuously improve. “The products we choose enhance our system’s ability to grow, enter new markets and stay on the cutting edge of technology,” he says. “The decisions we make must be with this big picture in mind.”
Jefferson Health
Thomas Jefferson University Hospitals has 951 licensed acute care beds, with major programs in a wide range of clinical specialties. TJUH is among the nation’s Best Hospitals in cancer care; ear, nose and throat; gastroenterology and GI surgery; neurology and neurosurgery; ophthalmology; orthopedics; and urology, as ranked by U.S. News & World Report (2015-16). Thomas Jefferson University Hospitals merged with Abington Health in May 2015 to form Jefferson Health. Jefferson Health comprises five hospitals, 16 outpatient and urgent care locations, as well as physician practices throughout the Delaware Valley. Together, these facilities serve nearly 73,000 inpatients, 239,000 emergency patients and 1.7 million outpatient visits annually.
Connecting the dots
There are many dots between a sourcing process and the patient, and they are often hard to connect, says Fontana. But they’ve seen real impact to patient care that comes from better supply management. “Let’s say we can concentrate volume with fewer vendors in a given orthopedic category. This translates not only to better pricing, but to fewer deliveries, reduced variation in instrumentation, improved logistics and lower complexity – all of which should lead to better, faster and more consistent sterilization of supplies that enable more on-time starts for surgeries, less bio-burden and reduced infections, etc.”